Dow, S&P 500 Rebound to Near Record Highs
For investors, August 2019 proved to be a roller coaster of a month. Following several erratic swings, both the Dow Jones Industrial Average and S&P 500 closed down from where they began on August 1, making for the second-worst month so far this year. With history suggesting that September is typically the worst month for stocks, hopes weren’t too high when the month began but, nearly two weeks later, key indices are now rebounding with a chance to return to record highs.
As of this writing, the S&P 500 is over 3,000 points, putting it just shy of the previous closing record of 3,025.86 set on July 26th of this year. Meanwhile the Dow is in relatively similar striking distance, currently sitting upwards of 27,200 compared to its record 27,359.16 seen on July 15th.
According to MarketWatch, there are several reasons why this rebound is occurring. The most recent development is a new report showing that retail sales increased at a better than expected rate in August. Fueled mostly by auto sales, retail rose 0.4% for the month — better than the 0.1% that some economists had anticipated. Explaining the significance of this event, E-Trade Financial VP of investment strategy told MarketWatch, “This morning’s number is above expectations but more importantly it’s the sixth straight month of positive growth for retail sales which is really encouraging. With holiday spending on the horizon and inflation at bay, we could continue to see momentum in the retail sector. A healthy consumer can help inject some energy into other sectors of the economy.”
Of course another big factor that’s been impacting the market has been trade. On that front, investors are seemingly optimistic about China and the United States finally reaching a deal and putting an end to the ongoing trade war. This week China said it would exempt some agricultural products such as soybeans and pork from import tariffs while President Trump announced that he would delay a planned increase on tariffs for Chinese goods until October 15th, saying he was doing so “as a gesture of good will.” Although a formal deal still seems a ways off, it would appear that these deescalations are giving investors hope.
If August’s wild ride is any indication, it may not be time to celebrate a strong September just yet. This is especially true as another Federal Reserve meeting is coming up next week, which could prove to have an impact on the markets one way or the other (and promises to get the President tweeting at the very least). Still it’s hard to ignore the current rebound the markets are making — here’s hoping it can continue on.